Schizophrenia is characterized by impaired cognitive control associated with prefrontal cortex dysfunction, but the underlying pathophysiological mechanisms remain unknown. Higher cognitive processes are associated with cortical oscillations in the gamma range, which are also impaired in chronic schizophrenia. We tested whether cognitive control-related gamma deficits are observed in first-episode patients, and whether they are associated with antipsychotic medication exposure. Fifty-three first-episode schizophrenia patients (21 without antipsychotic medication treatment) and 29 healthy control subjects underwent electroencephalography (EEG) during performance of a preparatory cognitive control task (preparing to overcome prepotency or POP task). The first-episode schizophrenia patient group was impaired (relative to the control group) on task performance and on delay-period gamma power at each of the three subgroups of frontal electrodes. The unmedicated patient subgroup was similarly impaired compared with controls, and was not different on these measures compared with the medicated patient subgroup. In contrast, delay-period theta power was not impaired in the full patient group nor in the unmedicated patient subgroup. Impaired cognitive control-related gamma cortical oscillatory activity is present at the first psychotic episode in schizophrenia, and is independent of medication status. This suggests that altered local circuit function supporting high-frequency oscillatory activity in prefrontal cortex ensembles may serve as the pathophysiological substrate of cognitive control deficits in schizophrenia.